Abstract. Relations between Peru and Japan go back over 100 years
to the time when Japanese first immigrated to Peru seeking work. Japan
became an important trading partner and aid donor over the last three
decades, and Japanese in Peru prospered, culminating in the election as
president in 1990 of Alberto Fujimori, a descendant of Japanese
immigrants. Relations between the countries were never easy and at times
even became strained, because Japan took a largely pragmatic economic
and political approach. The article argues that Japan followed a policy
that would be predicted by the realist paradigm for the most part,
though at times it had a tendency to invest more, provide more
development assistance, and risk more because of the ethnic ties between
Japan and Japanese-Peruvians. Those links were not strong enough, in
most cases, to overcome decisions made on practical considerations of
risk assessment and the Japanese desire to make the most political and
economically rewarding decisions.

The presence of a large community of people of Japanese descent
(nikkei) in Peru has been an important nexus for Japanese-Peruvian
relations for more than a century. Japan has always placed a premium on
its ethnic identity, and the significant number of nikkei in
Peru--representing the third-largest Japanese community outside Japan in
the world--has led to closer relations, especially since the 1960s.
However, Japan's economic pragmatism appears to overshadow its
tendency to favour its ethnic allegiance to Japanese-Peruvians.

This article examines the uneasy relationship between the two
distant partners, Japan and Peru, focusing on the economic dimension
(trade, aid, and investment) as well as on political aspects. I explore
the ways in which the ethnic tie between the nations has affected their
relations and I examine to what extent the generally pragmatic approach
of the Japanese toward foreign relations with Peru has been influenced
both by the presence of a population of Japanese descendants in Peru
and, most recently, by a reverse migration of a growing number of
Peruvian-born workers in Japan triggered by Japan's ethnicity-based
immigration policy.

The study chronologically analyzes how these relations have
evolved, with emphasis on the last three decades and particularly the
1990-2000 period. Japan is an important trade partner of Peru and one of
its major aid donors. Although there have been tense moments over the
years, due particularly to Peru's own domestic difficulties,
relations remained warm and cordial during most of the study period. The
closeness between the two countries reached its peak after the election
of Alberto Fujimori. However, once Fujimori resigned and gained asylum
in the land of his forefathers, relations became strained as Peru
pressured Japan to have Fujimori return to face trial on a number of
charges. Japan has so far refused, claiming that he cannot be extradited
because he is also a Japanese citizen. A successful president of
Japanese heritage in Peru was a significant factor in warming economic
and political relations between the countries; a disgraced leader in
exile in Japan became a contentious political issue between the two
countries and put a damper on economic relations as well. The very
factor that had strengthened the ties--a Japanese president--served as
the point upon which those relations foundered.

"Realism" postulates that states are driven by the core
concerns of security and control of goods, technology, and capital.
States attempt to channel resources in order to survive. Thus, the
realist paradigm creates a predictive framework in which actions of
states can be traced to rational motives based on sustaining and
improving the economic interests of the country.

This article explores the way realism can be used to analyze
Japan-Peru relations, and the limits of its accuracy. The realist model
would predict minimal Japanese involvement in Peru, because, as this
article will show, Peru offered few strong incentives for Japanese
investment or involvement. However, Japan became more involved than a
rational economic/political strategy would advise. This involvement can
be attributed to the ethnic tie between the two countries. In the end,
though, realism is a more powerful and better predictor than ethnicity.

According to one of the core dimensions of the realist paradigm,
Japan would be expected to behave toward Peru much as it did toward
comparable countries, and that behaviour would be shaped by the dominant
country's efforts to further its own best interests. In many cases,
Japan's political and economic policy toward Peru has mirrored its
policies toward other Latin American countries. The hypothesis here is
that the presence of the nikkei mitigated and, in some cases, overcame
realist policies. At several key points, the presence of a significant
Japanese community in Peru resulted in closer ties between the two
countries. My analysis of the overall relations between the countries
will show that ethnicity has affected those relations enough to alter
Japan's policies in some cases, but has not generally overcome
realist policies on a broad basis. For instance, when Japan perceived
that conditions for foreign investment were risky or not attractive
enough during the 1980s, it sought other destinations. Hence, for much
of the 1990s new Japanese investment was not undertaken in much of the
region, including Peru. This article examines the extent to which the
presence of nikkei has influenced Peruvian-Japanese relations over the
years, and tests the limits of that influence.

Developing a Relationship

Japan has a significant economic presence in Latin America despite
the great distance and the historical and geopolitical dominance of the
United States in the region. Japan's relations with Latin America
date back to the establishment of diplomatic relations, first with Peru
in 1873, then later with the other countries. Peru was also the first
country to admit Japanese immigrants in 1899. These migration flows that
later spread to Brazil and other countries (e.g., Mexico, Chile,
Argentina, Paraguay, and Bolivia) resulted in Latin America hosting the
largest Japanese population living outside Japan (Fukumoto 1999; Sakuda
1999).

For much of the last century, Peru had the third-largest number of
Japanese immigrants after Brazil and the United States. By 1941, more
than 33,000 Japanese had immigrated to Peru. The main objective of these
immigrants was to work for a few years and earn enough money to return
to Japan. Many experienced hardship working in the cotton and sugar
plantations. After their contracts expired, most of them headed for the
cities, mainly Lima (Gardiner 1975; Morimoto 1999).

In the mid-1930s, the Peruvian government imposed restrictions on
Japanese immigration and placed further restrictions on Japanese
businesses. At the outbreak of war in 1941, the Japanese community in
Peru faced retribution and hostility. Under pressure from the US,
Japanese schools were closed and Japanese businesses were hard hit. The
US government wanted Peru to sever its ties with Japan, and this led to
the closure of the Japanese Embassy (Gardiner 1981).

In the postwar period, Japanese-Peruvians began to assert
themselves as they gave up on the idea of returning to their homeland.
Most of them prospered through hard work and learned to love Peru as
their homeland (Sakuda 1999). In the 1960s, bilateral relations between
the two countries improved significantly, and Latin America as a whole
also became attractive to Japan as a rich source of raw materials needed
by Japan for its re-industrialization efforts. Japan's economic
presence in Peru became significant during that time, particularly in
trade and investment. Trade relations followed the unequal exchange
common among North-South relations: Peru exported primary goods and
imported manufactured goods. The bulk of exports to Japan were minerals
and goods with low value added, while the principal imports from Japan
were automobiles, machinery, and equipment.

As Japan began to take a more significant role as a donor nation in
the 1960s, it became more important to Peru, one of its recipient
countries. Political relations between the two nations were cordial.
Japan was always mindful of the strategic significance of the region for
the United States and therefore set a pattern of coordinating its
actions by first consulting with the Americans, thus following "the
US lead in Latin America" (Smith 1990, 30).

Evolving Peruvian-Japanese Economic Relations until 1990

Trade Relations

In 1967, a private initiative was forged, creating the Peruvian
Japanese Chamber of Commerce to promote trade. In October 1968, the
nationalist military regime of Velasco Alvarado (1968-75) seized power
in Peru and nationalized several American companies. Commercial contacts
between Japan and Peru then underwent a dramatic expansion, particularly
after the Peruvian government made known its development plans and
requested investment, credits, and technical assistance from Japan,
especially in mining and oil exploration. The Velasco government made
assurances to the Japanese that nationalization was purely an issue with
the Americans. By 1970, Japanese firms were importing significant
amounts of copper, lead, and zinc from Peru. Japan's interest
stemmed mainly from the need to secure certain raw materials to help
sustain its rapid economic growth. That year Japan expanded its
commercial representation in Lima. Official trade delegations met in
Tokyo and Lima, and in 1971 the two countries signed their first mining
cooperation agreement (de la Flor 1993).

As shown in Table 1, trade between the two countries during the
1970s expanded rapidly. Peru maintained a positive trade balance. In
1972, Japan became Peru's second-largest export market and its
thirdlargest import supplier. About 80% of Peru's exports to Japan
were concentrated in minerals, especially iron ore and non-ferrous
metals such as copper, lead, and zinc. Japan's interest in raw
materials led it to devise a "resource diplomacy strategy, which
meshed well with Peruvian desires to obtain capital for
development" (Stallings and Szekely 1993, 39). According to de la
Flor, "Japan's resource diplomacy put little weight on asset
ownership" (1993, 78). Japanese firms provided funding for the
development of mineral resources in exchange for long-term iron ore
supply contracts. Minority investment, in some sense, sheltered the
Japanese firms from the emergent nationalism that was prevalent in the
Andean region in the early 1970s. The Japanese strategy was to form
consortiums of trading companies that worked with Peruvian authorities
to promote joint ventures with the state or private ventures in which
the state played an intermediary role in the negotiations (Kamiya 1998;
Lausent-Herrera 1991).

During the 1980s, Peruvian exports to Japan became more diverse as
fishmeal, oil, and coffee were offered. However, these commodities had
greater price volatility; during the first half of the decade
(particularly since 1982), they lost much of their value. Although trade
did increase during the first half of the decade, there was a slight
decrease during the second half, triggered by Peru's debt crisis,
declining commodity prices, and the populist policies of President Alan
Garcia (1985-90). In addition, labour unrest and the fiscal crisis
undermined Peru's export competitiveness (Thorp 1991). Skeptical
about events in Peru, Japan sought more stable and reliable markets such
as Chile, Australia, and other countries in Asia.

The trade balance during those years was favourable to Peru even
though its exports of non-traditional goods to Japan did not increase to
any significant degree. This type of arrangement is what Kuwayama (1997)
labels a "vertical" relationship, as opposed to the
"horizontal" relationship Japan was maintaining with other
Asian countries that were exporting and importing mainly manufactured
goods.

Development Assistance

The realist paradigm stresses that foreign aid is motivated by the
donor's pursuit of economic and political self-interests (kokueki).
Japanese foreign aid to Peru largely fits this dominant view in the
literature (Schraeder, Hook, and Taylor 1998). However, this is not to
say that the presence of a significant number of migrants was not
important, albeit secondary. As the world's largest donor of
foreign aid (OECD 1990), Japan tries to use foreign aid to maximize the
return on its foreign policy goals. Among its economic motives are
securing access to raw materials, expanding its export market, and
promoting overseas business affiliates. In pursuit of economic benefits
the Japanese government works closely with private firms that want to do
business in a specific country (Hook 1995). A Japan External Trade
Organization (JETRO) office exists in every capital city where Japan has
an economic presence. As Katada puts it,

the government-private sector relationship has always influenced
Japanese governmental behaviour. Japanese official financial
flows to Latin America in the 1970s and 1980s took
the form of the so-called national project. This scheme encompassed
projects (a) that were directly related to the national
interest, particularly with regard to natural resource security;
(b) in which Japanese companies participated as a
group; and (c) that were supported directly or indirectly by
governmental organizations. (1997, 933)

In the early 1970s, Peru was the largest recipient of Japan's
official development assistance (ODA) in Latin America (de la Flor
1993). During the 1980s, Peru's share of Japan's ODA decreased
even though Japan was still the second most important provider of aid
(Berrios 2000). Japan's technical assistance, channeled through the
Japan International Cooperation Agency (JICA), increased, particularly
in the exploration and mapping of mineral resources and the elaboration
of feasibility studies (de la Flor 1993).

A common form of Japanese aid is concessionary loans. ODA loans to
Peru started in 1973 when the first credit was extended to ElectroPeru
to construct transmission lines between Lima and Chimbote. Although the
first credit line was at 3.5% interest repayable in 25 years, others
were granted in 1976-78 at 5% interest repayable in 20 years, and others
followed at 4.24% interest (Alayza Betochi 1989). These loans were
mainly for infrastructure development projects in electrical
transmission lines, telecommunications, and roads. Other loans were also
made available by Japanese firms to secure raw materials to be exported
to Japan.

While technical assistance rose steadily during the 1980s (see
Figure 1), increasing from $5 million in 1980 to nearly $18 million in
1989, no loans were issued to Peru from 1983 until the end of that
decade because of the country's inability to pay its foreign debt.
Perhaps this is the reason why Japanese ODA to Peru in the latter half
of the 1980s shrank even as technical assistance was on the rise.
Overall, Japanese aid to Peru increased steadily throughout the 1990s,
and the data from Table 5 show the loans Peru received, which made it
the largest recipient of government yen loans in Latin America.

The presence of Japanese immigrants has been a major force in
influencing Japanese foreign aid to Peru. Immigrants abroad are
politically important to Japan because of the national concern for
Japanese descendants. This concern is reflected in the fact that Peru
and Brazil, the countries with the most Japanese descendants, have
consistently received the most aid. The consistency in giving more aid
to countries with larger Japanese-descendant populations shows the
extent to which ethnic ties mitigate the purely pragmatic approach.
Japan gave more aid to Peru than to any other Latin American country of
comparable size and economic characteristics, apparently valuing it as a
country with citizens of common ancestry and cultural interests.

The influence of the ethnicity factor only goes so far, however.
Japan's economic interests and, in the late 1990s, its political
concerns largely overwhelmed the effect of its ethnic ties with Peru.
Many authors (see, e.g., Orr 1990; Potter 1997; Rix 1980) have pointed
to the correlation between aid and economic interests of various kinds.
Studies have supported the claim that ODA is given to secure resources,
to safeguard market potential for Japanese companies, and to support
those countries that have borrowed heavily from Japan.

Tuman, Emmert, and Sterken (2001) reported a low correlation
between trade and investment with ODA in Latin America, but their study
looked at the region as a whole from 1979 to 1993 and did not capture
some of the variations in Peru. There was a strong link between trade
and aid in the 1970s and early 1980s in Peru, but less so in the second
half of the 1980s and 1990s, when reciprocal trade as a percentage of
both countries' overall trade total decreased. Trade fell off as
risk-averse Japanese business interests backed away in the face of
regime change, political upheaval, and terrorism in the late 1980s. The
fact that aid did not fall off as sharply during this period may again
point to the importance of the cultural bond that kept the government
contributing to Peru. The breakdown in the 1990s is attributed to poor
economic conditions, terrorism, and the effects of the Fujimori
scandals. Nevertheless, as of the end of 2003 Peru remained among the
top five recipients of Japanese ODA in Latin America, again attesting to
the strength of a bond that was sorely tested and may finally have
reached the breaking point.

Japanese FDI

Japanese foreign direct investment (FDI) in Peru began at the end
of the 1960s and flourished in the 1970s. During those years, Japan was
undergoing a period of rapid economic growth. According to Kamiya
(1998), the goal was initially to secure a source for raw materials and,
later, to put Japan in an advantageous position within the emerging
subregional Andean market (Andean Pact). During the 1965-75 period,
Japanese firms were interested in penetrating the consumer market.
Investments were made in light assembly plants. Investments in
appliances and other lines of manufacturing were associated with such
firms as National (Panasonic), Matsushita Electric, Honda, and
Ajinomoto. Auto manufacturers such as Nissan and Toyota also began to
assemble automobiles for the subregional Andean market. In petroleum,
three Japanese trading companies (Mitsui, Marubeni, and Mitsubishi)
formed JAPECO (Japan Peru Oil Corporation) to construct the TransAndean
oil pipeline to transport oil to the coast. In return for the $340
million credit provided by this consortium, the companies obtained the
right to ship oil from Peru at an attractive price. In mining, where the
bulk of Japanese investment was found, Mitsui signed the first mining
agreement with the Peruvian government, and a number of other Japanese
firms soon became actively engaged in mining copper, lead, and zinc (de
la Flor 1993). Some of these firms made lines of credit available to
Peru's state enterprises, thus tying these loans to a desire to be
awarded contracts and to make it easier for them to invest in this
sector (Torres Cuscano 1994).

It is interesting to note that important investment decisions were
made in coordination with the Japan Export Import Bank (JEXIM) and the
Overseas Economic Cooperation Fund (OECF), both of which facilitated
loans for some of Peru's investment projects with Japanese
participation. Initially these types of investments, along with
development assistance, were tied to the needs of companies. As Kamiya
puts it, "investments were made in tandem with financing from a
Japanese governmental agency, with private business, and with Japanese
contractors in a well-integrated package" (1998, 9).

Until 1976 Peru was the second largest recipient of Japanese FDI in
Latin America. After 1977 Japanese investments increased in Mexico,
surpassing Peru. During the second half of the 1980s, Peru suffered the
sharpest degree of Japanese net disinvestment in the region (Tuman and
Emmert 1999). This change is evident in Table 2. Other countries, such
as Mexico and Chile, had become larger recipients of Japanese
investment. Japanese FDI had been stimulated by the appreciation of the
yen in the mid-1980s and the effects of a booming "bubble
economy" (Mizuno 1993). However, doing business in Peru became
increasingly risky as the country went through a period of escalating
violence and an unfavourable economic climate.

As payments for earlier loans came due in the 1980s, Peru made only
partial payments and had to reschedule. By 1988, Peru's debt to
Japan was approximately $1.7 billion, or about 8% of Peru's total
public debt, which at the time stood at $20.9 billion. Moreover, during
the second half of that decade no further loans were issued to Peru
because of its inability to pay them back. Peru's financial
standing was further complicated when President Alan Garcia announced
that Peru would only pay its creditors 10% of its export earnings on
debt service. The Japanese made it clear that Peru had to comply with
its outstanding obligations if it was to receive new funding.

It can be argued that Peru enjoyed special consideration because of
the long-standing presence of a sizeable Japanese population. However,
the nikkei factor was not enough to outweigh other considerations that
began to make economic dealings with Peru a bad bet, including political
turmoil and economic ills. Japan was willing to assist Peru as long as
the country represented a reasonable risk, but drew back, just as it did
in other similar situations (e.g., in Brazil and Mexico), when risk
became the overriding factor (Kuwabara 2003).

Economic Relations under the Fujimori Administration (1990-2000)

The Fujimori decade provides the best opportunity for examining how
Japan-Peru relations were influenced by the bond of common ethnicity. It
could be said that the presence of Alberto Fujimori prompted the
Japanese to engage Peru more fully than they ever had. Yet Japanese
caution and pullbacks during the 10-year administration of Fujimori
indicates, once again, that realism always trumps ethnicity in trying
situations.

Although there are no precise figures, estimates put the Japanese
population in Peru in 1990 at between 55,000 and 85,000. That year,
Alberto Fujimori became the first descendant of Japanese parents to be
elected president of Peru. Initially the nikkei community in Peru was
not very receptive to Fujimori's bid for the presidency. He was
considered a dark horse. And yet, tired of politics as usual and the
false promises of Peru's traditional political parties, the
electorate saw in Fujimori a very determined and diligent
Japanese-Peruvian. Fujimori was portrayed as hard-working, reliable, and
honest. While his success and achievement soon became a source of pride
to the nikkei community, there was also fear of impending failure
because of his lack of government experience.

Japanese diplomatic memorandums in the early 1990s stressed that
increasing aid to Peru would boost the image of Japanese descendants and
Japan (Andrade 1992). Similarly, the Japanese realized that the failure
of Fujimori would have serious consequences for nikkei and for
Japan's image in the region.

When Fujimori was elected president, the Japanese public was
elated. Magnier (2000) notes that "surveys ranked his election
among the most exciting foreign news stories of 1990." During his
campaign Fujimori had pledged to restore the values of honesty,
integrity, and hard work, virtues that the Japanese could relate to.
They were strongly behind him and enthusiastic about his presidency and
the hopes of bettering Peru. The new president appointed a number of
prominent nikkei to key government posts, the first time nikkei had
secured such positions.

Under the Alan Garcia administration at the end of the 1980s,
Peru's economy had drastically deteriorated. But, lacking a clearly
defined policy of development assistance in the newly emerging
international order, the Japanese government was cautious because
Fujimori was facing serious political and economic challenges at home.
While some Japanese citizens were collecting humanitarian aid for
distribution in Peru, Japan insisted that Peru's economic crisis
was severe enough to warrant caution. Less than three weeks before his
inauguration, Fujimori arrived in Japan and was greeted by enthusiastic
crowds everywhere he went, yet the Japanese government made no
commitments. Asked by the press about the official reaction he had
received, Fujimori revealed that it had been "neither hot nor cold,
but lukewarm" (Smith 1990, 38).

According to Murakami (1995), Japan was placed in a unique
situation because Fujimori's success could be associated with
Japan's image. However, the Ministry of Foreign Affairs stressed
that Japan was looking for ways to help Peru not because Fujimori was
nikkei but because of his far-reaching liberal economic policies. These
policies helped Peru achieve economic stabilization, but reinforcement
was needed to achieve growth and to reduce poverty. As a result, the
government of Japan began to search for ways to help alleviate
Peru's pressing financial insolvency. The first order of business
was to mediate a bridge loan to help Peru improve its financial
position.

During his pre-inaugural trip in July 1990, Fujimori sought to
reassure the US and Japan, as well as multilateral financial
institutions, that Peru wanted to restructure its foreign debt and get
back on track financially. Upon arrival in Tokyo, Fujimori was received
by Emperor Akihito and later by Japanese government officials to whom he
explained Peru's disastrous economic situation and the need for
financial assistance (Aquino 1994). The financial problems inherited by
Fujimori were threatening to become an obstacle for new funding sources
and future foreign investment. The intention was not simply to
renegotiate a debt package but to restore Peru's standing in the
international financial system.

Peru had resumed interest payments on international obligations and
wanted to restore its external credit rating. With the help of
then-Secretary General of the United Nations, Javier Perez de Cuellar,
Fujimori was able to meet with the directors of the International
Monetary Fund (IMF), the World Bank, and the Inter-American Development
Bank (IDB). These directors made it clear that, in exchange for
sympathetic treatment, Peru would have to agree to the conditions set by
these financial institutions. While in Japan, Fujimori was also
persuaded to reach an agreement specifically with the IMF. The Japanese
insisted that any new loans would be negotiated only after Peru had met
the conditions set by these multilateral financial institutions.

A support group of creditors, the Grupo de Apoyo, was formed in
1991 to help Peru improve its financial position. It consisted of
several developed countries (Japan, United States, Germany, Spain,
Canada, France, Italy, Belgium, The Netherlands, Sweden, and
Switzerland), with the US and Japan taking the initiative to help assist
Peru to become "reinserted" into the international financial
system. Fujimori made a formal commitment to refinance Peru's
arrears with creditor countries. Negotiations continued through 1992
under IMF supervision and monitoring.

Peru first negotiated its debt and normalized its relations with
the IDB by securing a bridge loan in 1991 and, later, three other loans
from the World Bank for balance of payment support. In March 1993, the
US Department of the Treasury and Japan's Export Import Bank
provided a bridge loan so that Peru could pay back $878 million that it
owed its creditors. Peru was able to settle its debt with Japanese
concerns such as JAPECO, which had built the oil pipeline to the
northern coast. Japan had made it clear that settling this debt was
crucial if Peru were to receive any future credit (Bowen 2000). Two
months later, Peru was also able to restructure loans owed to foreign
governments and institutions represented in the Paris Club.

The high level of consultation between the US and the Japanese
government concerning Peru is worth noting here. Throughout the 1990s
both countries promoted a common agenda concerning Peru and their
development assistance objectives. While Prime Minister Ryutaro
Hashimoto was visiting Peru in 1996, he announced that Peru had been
earmarked for a new strategy of development. Peru would be the only
country in Latin America to receive annual financial support from the
OECF (now JBIC, the Japan Bank for International Cooperation). Japan
stressed that its aid policy toward Peru emphasized poverty alleviation,
assistance for the social sector, and improvements to the economic
infrastructure.

There is no question that Japan did provide a larger sum of
economic assistance to Peru after 1990--as discussed below--because of
Fujimori and what he represented. Murakami (1999) argues that Peru would
not have received this assistance if Fujimori had not been elected. Alan
Garcia's government decision not to pay Peru's foreign debt
had isolated Peru in the international financial community. Japan had
not provided any loans during Garcia's tenure (1985-90) and had
reduced its investments. Although Peru has not always been Japan's
top aid recipient even in Latin America, Japan has generally been one of
the leading aid donors to Peru. Of the Latin American countries
receiving Japanese ODA in FY2000, Peru ranked third among recipients of
grant aid, fifth for technical assistance, and first for loans. The
presence of a Japanese descendant as president was a pivotal factor in
Japan's decisions to reach out to a country that was in such poor
economic shape.

Bilateral relations with Japan under the two Fujimori
administrations were warm and cordial, albeit not without problems. The
first incident occurred in 1991 in Huaral, where three JICA agricultural
experts were assassinated by Sendero Luminoso (Shining Path) insurgents.
In reaction to this violence, Japan recalled its aid personnel and froze
technical cooperation in Peru. Lacking advisers to conduct feasibility
studies, projects faced delays, and Japan's technical assistance
witnessed a gradual reduction from 1990-91 (Hosono 1998).
Non-reimbursable financial assistance, however, did increase,
facilitating the provision of equipment (see Table 3). The number of
scholarships for Peruvians traveling to Japan for short training courses
also substantially increased.

In April 1992, the president launched a self-administered coup
(autogolpe) that led to the suspension of Congress, the judiciary, and
the Constitution of 1979. The dramatic measures adopted by Fujimori
caught the Japanese by surprise, since he had just visited their country
a few weeks earlier (Murakami 1995). There was no immediate negative
reaction by Japan to the emergency measures taken by Fujimori. Prime
Minister Kiichi Miyazawa declared that Japan was not going to review its
aid policy to Peru. Instead, Japan emphasized the importance of
returning promptly to the democratic process. In June of that year,
Tesuruke Tanaka, head of the Latin American division of Japan's
Ministry of Foreign Affairs, traveled to Lima to talk with Fujimori and
try to prevent possible OAS sanctions.

By 1995, Fujimori was back in office with a comfortable margin of
the vote. Bowen (2000) notes that in the middle of that year, polls
showed that 71% of Peruvians chose Japan as the country they most
admired. In Japan, however, sentiment toward Peru began to change. In
1996, Movimiento Revolucionario Tupac Amaru (MRTA) guerrillas seized the
residency of the Japanese ambassador, Morihisa Aoki, and held him,
several Japanese businessmen, and dozens of other hostages for 127 days.
The guerrillas had targeted Japanese interests in Peru precisely because
of that country's close ties to the Fujimori government. Public
opinion in Japan began to turn against the Japanese presence in Peru. To
make matters worse, Japan's Ministry of Foreign Affairs again
advised Japanese travelers to avoid Peru because it was not considered
safe. After the hostage crisis, Morihisa Aoki, who was a friend of Peru,
was forced to resign as ambassador and assume responsibility for the
incident. Although Fujimori bestowed upon him the country's highest
decoration, Aoki returned to Japan in shame and was reassigned to Kenya.
The hostage taking was the most serious in a series of incidents that
had damaged Peru's image for prospective Japanese investments.
Coverage of Peru in the Japanese media during these months was
unprecedented, and in view of the magnitude of the crisis, the image of
Peru for the Japanese public was once again seriously affected (Andrade
1998; Murakami 1999).

Trade Relations

Although the US is Peru's most important trading partner,
Japan has frequently been its second most reliable partner, and China
has recently become important because of its large purchases of minerals
and fishmeal. The Asia-Pacific region is now one of the main
destinations of Peruvian exports (Gonzalez Vigil 1994; Carrillo,
Gonzalez, and Hernandez 1999). Although there has been some
deterioration in the balance of trade since the liberalization of the
Peruvian economy in 1990, a trade surplus has been maintained with Asian
countries, even though in recent years Japan has gained more weight as a
source of Peruvian imports. This process has resulted in greater trade
diversification for Peru, away from its traditional trading partners
such as the United States.

A key condition for success in a relatively new market is the
promotion of exports. Japan, through its JETRO offices in Lima, has been
promoting ways to bolster trade with Peru. At the same time, Peruvian
trading groups interested in entering the Japanese market have at
various times displayed a wide variety of their products in exhibition
halls in Tokyo and Lima. In the case of Peru, such promotion has been
the responsibility of PROMPEX, a government agency. One private entity
that has been promoting Peruvian exports, ADEX, has been working on
behalf of small exporters without much government support.

Even such combined efforts to promote Peruvian exports do not have
the resources of, for example, PromChile, which is actively supported by
the state. Furthermore, PROMPEX does not have the qualified personnel
needed to promote Peruvian goods in Japan. Chile has been a success
story because it has a coherent and well-defined trade policy, something
that Peru lacks. For example, when JETRO puts on an exhibition of
Peruvian products, rather than displaying products for which there is
high demand in Japan, it mounts a museumlike display of arts and crafts:
beautiful to look at--the Japanese go to see it--but not to place
orders. Most importantly, Peru still does not often have high-quality
goods to offer, and, even when it does (for example, fruits), it has
faced impediments from Japanese authorities. The Peruvian embassy in
Tokyo has only one junior diplomat, who also acts as a commercial
representative, while the Chilean embassy has a commercial office with
three MBAs who know the market well, two Japanese employees, and a full
secretarial staff. In a span of 10 years, Chile has more than quintupled
its exports to Japan, making that country its largest export market,
while Peru's exports to Japan have not grown proportionally.

Japan knows the Latin American market much better than Latin
America knows the Japanese market because its firms have been operating
there for many years. Japan also has JETRO offices in many countries,
which work with its embassies' commercial offices as a team. Latin
America has much to learn from Japan, which is not itself an easy market
to penetrate.

When Peru was finally admitted to the Asia Pacific Economic
Cooperation (APEC) in 1998, there was exuberant optimism because of the
economic benefits that could be reaped from a more dynamic relationship
with the Asia-Pacific region (Embajada del Peru en Japon 1999). Peru
would certainly benefit, as have members such as Chile and Mexico.
Besides the US, the key players are mostly the more dynamic countries of
East Asia (Japan, China, Korea, Hong Kong, and Taiwan). APEC as a whole
represents more than half of all world trade. Under APEC, Peru could
increase its trade with Asia even further due to its privileged position
as a member of the association, much like Mexico and Chile. For this
trade relationship to materialize, Peru needs to redefine its trade
policy, be more aggressive in its export policy, have in place a better
trade infrastructure, and provide assurances that it can meet orders for
high-quality goods at competitive prices.

Peru's more active engagement with the Asia-Pacific region and
its acceptance into APEC are two of the most significant achievements in
Peruvian foreign policy in recent years (Ferrero Diez Canseco 2000; Mols
1999). As is widely known, APEC is a grouping that promotes consultation
and cooperation rather than a customs union or common market. Time will
tell whether Peru can reap the benefits of participation in such an
association.

Development Assistance

After Fujimori assumed the presidency, Peru became one of the
biggest beneficiaries of ODA from Japan in the Latin American region.
Japan provided non-refundable aid (mainly in the form of grants) for
development projects, dispatched technical experts, and donated
equipment. There were also non-reimbursable "non-project"
loans toward economic restructuring, and an increasing number of
scholarships for specialized technical training (Hosono 1998; JICA 1999,
2002; Yamada 1994).

Technical assistance, which is channeled through JICA, experienced
its ups and downs. In 1991, after the three Japanese agricultural
experts were assassinated in Huaral, JICA was forced to suspend some of
its projects and had to send its experts and volunteers home. Without
the presence of technical experts, the number of scholarships increased
to compensate for the withdrawn experts.

Japan was supportive of Fujimori's efforts to reduce pockets
of extreme poverty, even if these efforts fell short of their
objectives. Peru continued to receive non-refundable grants from Japan.
However, the grant element as part of ODA was small. Although Peru
technically did not qualify for grants because its per capita income was
too high ($1,500), Japan continued to give Peru a small number of grants
and included Peru in the program for specific humanitarian donations. In
August 1996, as a result of an official visit by Japanese Prime Minister
Ryutaro Hashimoto to Peru, security measures had improved, and Peru was
classified as an "annual programming country"--the first of
its kind in Latin America. This classification provides an opportunity
to send annual missions to propose and discuss new cooperation projects
(Embajada del Japon 2001; Hosono 1998). Japan even assigned an economic
adviser who was posted at Peru's Ministry of Economics and Finance
to facilitate coordination of the aid process, new projects, and
loan-related procedures of Japan's ODA.

ODA data reflected in Table 4 show that in 1991 and 1992, Japan
ranked first among aid donors to Peru, but this ranking was due in part
to structural adjustment loans made to Peru. In subsequent years
Japan's status dropped, and Peru remained first in Latin America
only as the largest recipient of development loans. Although in 1996
Japan was Peru's main donor, the figure in actual dollar value was
the lowest received that decade. Japan ranked first again in 1999 and
2000, but ODA statistics show that throughout the 1990s, both Mexico and
Brazil received more than Peru in grant aid and technical assistance.
The figures seem to indicate that economic size matters. Interestingly,
in Asia, the top recipients of Japanese ODA are China and Indonesia.

Although official development cooperation funds increased during
the 1990s, in no way are they substantial amounts. As shown in Table 3,
of all the forms of aid Peru has received from Japan until 2000,
repayable loans have been the most common. From 1989 to 1999, the net
amount of loans Peru received was $890 million, while the amount of
grant aid was $359 million and technical aid was $299 million. In 1999,
grant aid decreased to $6.6 million from $45 million the previous year,
while the disbursement of loans increased from $22 million in 1998 to
$164 million in 1999.

Ambassador Aoki, upon assuming his post in Peru in 1994, began to
work diligently to see that Peru be given special consideration and that
aid be designated to support specific programs for three years at a
time, conditions that only Japan's Asian neighbours had been
offered. The seizure of the ambassador's residence in December 1996
was a setback for restoring the deployment of Japanese technical experts
and volunteers to work in Peru. Instead, Japan had to slowly reconsider
its aid policy in Peru, taking more precautions and freezing some of its
technical cooperation programs. The Ministry of Foreign Affairs Annual
Report (1999, 243) proclaimed that, in Peru, "future development
assistance should focus on gradually shifting cooperation to the form of
loan aid."

From 1973 to the end of 2002, Japan approved a total of 30 project
loans and 2 structural adjustment loans. The total commitment was $2.8
billion, and there was an outstanding balance of $1.3 billion. Of these
approved loans, 11 were implemented and completed, but 19 were still
pending, and disbursement would follow if Peru could overcome current
budgetary constraint problems. These projects are mainly aimed at
reducing poverty and improving infrastructure. Between 1983 and 1994,
Peru was in arrears, unable to pay its foreign debt. Under such
circumstances, Japan did not issue any new loans until Peru had met the
conditions set by the IMF.

Under Fujimori, several loans were approved and several projects
implemented. In his 1999 visit to Japan, Fujimori was able to secure
$416 million in new credits from OECF and $242 million from JEXIM. If
another $300 million agreed to jointly with the IMF are added, these
credits total $958 million. Although these are mainly soft loans, this
financing translates into more accumulated debt for Peru as opposed to
capital inflows in the form of investment. As can be seen in Tables 5
and 6, the list of loans from JEXIM and OECF (now JBIC) is long.

Japanese Foreign Direct Investment

In the 1990s, efforts were made to enhance commercial contacts
between Japan and Peru and to persuade Japan to invest in Peru. But even
with all the diplomatic efforts made by Fujimori, Japanese confidence in
Peru was still tenuous. Japanese firms lagged behind European and
American companies in investment. To some extent this gap was due to the
economic slowdown of Japan, the political climate in Peru, and the
legacy of terrorist attacks against Japanese interests in Peru.
Diplomatically, Japan was also taking more precautions, and its
development policy toward Peru was under greater scrutiny.

But economic cooperation and foreign policy are quite different
from private investment. Even tourism was severely affected, as Japanese
citizens were advised at various times not to travel to Peru because
their safety could not be guaranteed. There is no way of knowing if
investment would have been higher had there not been so many incidents
against Japanese diplomatic and economic interests in Peru. Kamiya
(1998) believes that Peru's failure to promote itself, more than
the political and security situation there, was responsible for the
disappointingly low levels of Japanese investment. Japanese authorities,
however, would argue it is the other way around.

While Peru received generous amounts of Japanese development
assistance, private investment was almost non-existent in the 1990s.
According to the UN Economic Commission for Latin America and the
Caribbean (ECLAC), Peru's privatization program brought in $8.4
billion through the sale of some 150 state-owned enterprises (ECLAC
1998; CEPAL 2000). Peru had one of the most liberal foreign investment
regimes in the region. However, Japanese firms showed little interest in
Peru's privatization efforts during the 1990s. Compared to the FDI
stock of other Latin American countries, Japan ranked very low, and,
therefore, the figures are so insignificant that they do not even appear
in the statistics kept by the Ministry of Finance (see Table 2).

Peru was not an exception. Despite the improved climate for foreign
investment in much of Latin America, Japanese firms have been skeptical
about the long-term economic prosperity of the region. Although many of
the Japanese companies operating there were restructured, very little
new investment was generated (CEPAL 2000). According to Peruvian
investment statistics released by CONITE (Consejo Nacional de Inversion y Technologia), Japanese FDI amounted to about $100 million at the end
of 2001. This places Japan twelfth on the list of foreign country
investors. Over 50% of Japanese investments are in mining and 30% in
industry. Mizuno (1993) and CEPAL (2000) argue that many Japanese firms
did not par-ti-cipate in the privatization process underway in Peru (and
much of Latin America, for that matter) mainly because of their style of
management. The decision-making process of Japanese firms is typically
slow, and competing in privatization bids often requires quick
decisions.

In spite of Peru's political troubles with subversion,
Peruvian-Japanese relations remained strong as Fujimori tried to promote
closer economic ties with Japan. The mere fact that Fujimori traveled
ten times to Japan during his first two administrations is an indication
of the importance he placed on economic relations with Japan. However,
one of the biggest frustrations of the Fujimori administration was that
it was unable to attract Japanese foreign investment even though the
president was able to secure project loans and technical assistance.

The Dekasegi Phenomenon

The Fujimori years were also the period in which migration from
Peru to Japan began to increase substantially. The international flow of
labour, or transnational migration, has been driven primarily by
economic pressures and income disparities between the industrialized countries of the North and the less developed countries of the South.
The main reason for immigrating to high-income countries such as Japan
has been higher wages (Ninomiya 1992). While Latin America was barely
emerging from its economic woes at the end of the 1980s, Japan's
economy was still growing. However, Morimoto (1999) has argued that
perhaps one other reason that the reverse migration accelerated was that
the nikkei community felt vulnerable to the anti-Japanese sentiment
during the 1990 presidential campaign. As Kushner puts it, "some
nikkei worried that a Fujimori victory would bring new attacks on the
community" (2001, 32).

During the first part of the twentieth century, thousands of
Japanese migrated from Japan to Peru. Their presence increased over the
years and numbers some 80,000 at present. Almost a century after this
migration began, there has been an exodus in reverse--a so-called return
migration--of young contracted factory workers (Locklin 2001; Take-naka
1999; Tsuda 1999; Watkins 1999). When Japan's Immigration Law changed in 1989 to allow foreigners of Japanese descent (nikkei-jin) to
work in the land of their ancestors, Japan started to receive a flood of
Japanese Brazilians and Peruvians in search of work. The vast majority
of these workers (dekasegi) were of the second and third generations
(nisei and sansei, respectively). Japan was attractive because
unemployment was very low and the yen was strong relative to the US
dollar. While the new migration law was seen as an international display
of Japan's generosity toward its own people, it also achieved the
objective of meeting the country's demand for low-skilled labour.
Recent studies have examined how these workers who went to seek
opportunities also found hardship. The situation was even worse for
those who tried to take advantage of opportunities in Japan by entering
with false documents. Watkins (1999) argues that of the recent Latin American immigrant community working in Japan, the largest number of
"false nikkei," or illegal workers, are Peruvians.

According to official Japanese figures, in 1988 there were 864
Peruvians in Japan. In 1990 the number increased to 10,279, and by 1997
the figure was 40,394 (see Table 7). According to the most recent
estimate, there are currently 52,000 Peruvians working in Japan
(International Press 1999). While approximately 45,000 were registered
with the Immigration Bureau in 2000, the rest were not, and are thus
considered illegal. One reason is that although most of them are
nikkeijin, some managed to come with false proof of Japanese ancestry
(Altamirano 1996). Peruvian estimates are much lower, because they are
based on the number of people who have registered with the Embassy of
Peru in Japan. Many of the workers dispersed throughout the islands do
not make the necessary trip to Tokyo simply to register.

One of the benefits that Peru receives from this transnational
migration phenomenon is income remittance to the home country, even if
it comes at a high cost of human capital, because many of those who
leave are well-educated. Aquino (1999) estimates that 50,000 Peruvian
labourers (dekasegi) are working in Japan and that they sent home about
$500 million in 1998. But that figure would seem overly optimistic.
Considering that in that year the Japanese economy was mired in
recession, the assumption that almost all the dekasegi were actually
working and sent home a significant part of their earnings seems
unwarranted. That year Peru's primary export was gold, with $925
million in sales. Second was copper, with $772 million in sales. If
correct, Aquino's figures would mean that the remittance of money
from Japan would be the third-largest source of capital inflow to Peru,
perhaps more significant than the total amount of recent Japanese
investments. If one were to add remittances from the United States, home
for more than 200,000 Peruvian workers in 1998, remittance of foreign
earnings would surpass Peru's earnings from any export commodity.
This scenario is doubtful.

The Fujimori Saga in 2000-2001

Fujimori's decision to run for a third term as president set
off a crisis that eroded his popularity. As Fujimori muscled his way
into a third term, he was criticized for his autocratic style and his
desire to stay on indefinitely. Amid myriad charges of corruption and
scandal within his administration, Fujimori sought asylum in Japan and
resigned. In a parallel development, Fujimori's brother-in-law,
Victor Aritomi, also resigned. He had been appointed to the post of
ambassador to Japan by Fujimori in February 1991, despite his lack of
qualifications. Out of a job because he was not a career diplomat,
Aritomi was accused in the press of being an intermediary for Fujimori
who channeled donations for needy Peruvians to the president under
questionable circumstances (Patrian 2003).

The final collapse of the Fujimori era came when his right-hand man
and intelligence chief, Vladimiro Montesinos, was caught bribing
politicians to change sides. Montesinos had been a controversial figure
from the start and was considered the real power behind the executive
for a decade (Bowen 2000). After being on the run for eight months
before his capture in June 2001, Montesinos faces about 80 charges
ranging from arms and drug-trafficking, to money laundering, bribing
officials to fix the elections, wiretapping, and running a paramilitary squad. His trial is still underway, and prosecutors are seeking a
20-year sentence. Montesinos' web of corruption controlled large
portions of the military, the police, the Congress, and the judicial
system. His trial has become an important source of information that has
implicated Fujimori, as Montesinos attempts to gain a lighter sentence.
His continuing revelations have become deeply embarrassing and
politically lethal to those associated with the spychief, including
Fujimori.

For more than three years since Fujimori's departure in
November 2000, the Peruvian government has been pressing Japan for the
extradition of the former president to answer accusations leveled
against him. Japan had said during these years that it would deny any
request to send Fujimori back unless there was a legal procedure in
place, and the Peruvian government finally submitted a formal request in
August 2003. Because Fujimori's name was entered in Japan's
consulate registry in Lima after his birth, according to Japanese law he
is a Japanese citizen. To complicate matters, Japan and Peru have not
signed an extradition treaty. Although Tokyo has been facing mounting
pressure, all indications are that, because of his Japanese citizenship,
Japan will not send the former president back to Peru.

Although Peru's Congress accused Fujimori of crimes against
humanity arising from incidents during the war against Sendero Luminoso,
there has been no evidence to link Fujimori to the proceeds of
Montesinos' corruption. The charges against Fujimori centre on
abuse of power. All along, Fujimori has denied that he had direct
command over a death squad unit that carried out two attacks in the
early 1990s in which 25 people were killed. This denial has been
corroborated by Maj. Santiago M. Rivas, who said that he "never had
reported to the president" (Brooke 2002). However, according to the
findings of the Truth and Reconciliation Commission, Fujimori's
government is guilty of waging a dirty war.

The Japanese community in Peru, which had been initially lukewarm
about Fujimori's campaign and then full of pride after he won,
found itself in the painful position of seeing one of their own
humiliated. The Japanese public, so enthusiastic over his election, were
stunned a decade later by his resignation and flight to asylum in their
country. Some urged him to go back, but others, among them the
nationalist politicians, welcomed his presence (Sims 2001). Thus, while
he is discredited and criticized by many in Peru, he is still admired in
Japan.

Although Fujimori did a great deal to bring Japan and Peru closer
together, his stay in Japan since November 2000 has soured the relations
that he cultivated for 10 years. Peru's transitional government
(2000-2001) and the new administration of President Alejandro Toledo have put added pressure on Japan to hand over Fujimori to be brought to
trial, but Japan has not budged.

The feeling in Japanese government circles is that Peru cannot
guarantee a fair trial for Fujimori because it has a weak judicial
system. Peruvian government officials have noted that they find
Tokyo's protection of Fujimori disconcerting. Japan's
relations with Peru were strained even further when at mid-year 2001
Tokyo granted citizenship to Victor Aritomi, two weeks after Peru had
put out a warrant for his arrest. This action irritated the Peruvian
government, and relations took a turn for the worse as Peru sent a note
of protest and recalled its ambassador for consultations.

Peru feels impotent in these matters because Japan remains an
important partner and supporter of Peru's development efforts. The
Fujimori case has generated antipathy against Japan in Peruvian circles.
Shimizu (2001) raises the issue in terms of cost-benefit analysis. He
notes that the cost of allowing Fujimori to stay in Japan exceeds the
benefit. The cost is Japan's financial stake in Peru as well as
Peru's support of Japan in international forums. As Peru keeps up
the pressure, relations are likely to become even more strained. If Peru
wants to prevent relations from deteriorating any further, it will have
to tread lightly and be patient with Japan.

The antipathy against Japan in Peruvian government circles is due
to the indiscreet attitude of the Japanese government, the support
Fujimori receives from conservative politicians, and the Japanese media
that has downplayed the issue (Ogura 2002). So far Japan has not taken
any steps on the formal request for Fujimori's return. It took
nearly three years to translate the voluminous documentation into
Japanese. The political climate in Japan is such that Japanese scholars
doubt that Fujimori will ever be extradited or put on trial in Japan.
The wrangling over Fujimori and how to handle the case shows in some
respects the lack of understanding between the two countries (Shimizu
2001).

The fact that Fujimori enjoys the legal protection and support of
Japan, and is seen in a much more benign light there than in his own
country, indicates again the strength of the ethnic tie. This time,
however, that tie is working against Peruvian interests. It is clear
that pragmatic considerations in Japan still carry the most weight when
it comes to its decisions about economic policy.

Concluding Remarks

There is some evidence of a Japan-Peru relationship that is
stronger than would be predicted using the realism hypothesis. As the
evidence presented here has shown, Fujimori's ascension to the
presidency led to closer relations between Peru and Japan. The presence
of a significant nikkei population had already had an influence, at
times leading Japan to take a somewhat less cautious economic approach
than it took toward other developing countries. Fujimori's fall and
subsequent flight to Japan led to a rapid deterioration of economic and
diplomatic relations. However, the evidence also makes clear that
economic pragmatism always superseded the desire to aid fellow Japanese
and help a country with a nikkei leader succeed. Even during periods in
which relations between the two countries were good, Japan never took
substantial risks. Its trade was modest, foreign assistance came mainly
in the form of loans, investment was conspicuously absent, and it stood
ready to pull back at signs of trouble.

Peru for its part failed to grasp that it needed a sophisticated
understanding of Japan and the way its market works in order to succeed
as a significant Latin American trading partner. Peru failed to develop
unified strategies for pursuing its economic and diplomatic objectives.
The fostering of improved relations will depend mainly on Peru, which
needs to re-examine its trade policy and address its lack of knowledge
of the Japanese market, which has become a serious impediment to
expanding exports. Additionally, Peru will have to resolve diplomatic
tensions with Japan over the latter's protection of former
president Fujimori.

Economic relations between Peru and Japan can only improve if
bilateral trade, aid, and investment are further promoted. For this to
happen, it will be necessary to go beyond mere diplomatic efforts and to
specify clear and well-defined actions to foster increased knowledge of
what each has to offer the other and how to market it.

A major challenge for Peru (and the rest of Latin America) is to
sustain its level of economic growth, to fully develop legal structures
and regulations to make investment more attractive, and to make exports
more competitive. Japanese investors are still reluctant to invest in
Peru because of its geographic distance, concern for their security and
safety, changing regulations in the host country, and the small size of
Peru's internal market. On the Peruvian side, opportunities to
enter the Japanese market have not been fully explored or properly
researched. The challenge is to study the long-term opportunities by
improving the understanding of Japanese policies, customs, and demand
patterns. Japan is productive, efficient, and of much interest to
countries like Peru, but that interest cannot bear fruit without
cultivation. The potential for growth in Peruvian exports will require
active promotion from and direct participation by the state; small
private companies on their own are unlikely to succeed unless they can
rely on a well-defined, coherent trade policy aimed at enhancing exports
and promoting investment.

Notes

(1.) The author is grateful to the Institute of Developing
Economies (Tokyo) and the Japan Center for Areas Studies (Osaka), where
he was Visiting Research Fellow during the summer of 1999 and the winter
of 2001 respectively. This article was written in late 2003. The author
is also grateful to Marco Kamiya, Yusuke Murakami, and Tatsuya Shimizu
for reading and commenting on an earlier draft.

(2.) The realist paradigm is based on a premise that states act in
the international arena to promote their national self-interest. A
leading exponent of realism was Hans Morgenthau (1948). For a
comprehensive analysis of the realist approach, see Daugherty and
Pfaltzgraph (1990).

(3.) One example is Japan's development aid programs in
Thailand and the Philippines, where the donor responds to those
countries' requests as long as it accommodates the economic
interest of the donor. See Potter (1997).

(4.) For instance, Kawachi, the hometown of Fujimori's
parents, donated $1 million for the education of poor children in Peru.
Okinawa and Yamaguchi also made donations to schools and health posts.
On various visits to Japan, Fujimori received small donations from
private citizens or groups for the construction of schools, health
centres, and other purposes.

(5.) In New York, Javier Perez de Cuellar, then Secretary General
of the United Nations, had convened a meeting of the IMF, the IDB, and
Japanese banking officials. Although Japan was supportive of Peru's
economic restructuring, Japanese officials were concerned about whether
Fujimori would follow through on his promises.

(6.) In 1998 Peru was the seventeenth largest recipient in the
world of Japanese bilateral aid (based on cumulative net disbursement),
which was the largest in Latin America.

(7.) Throughout the 1980s and 1990s there was a climate of social
instability in Peru. The better known cases of attacks against Japanese
businessmen are the attempt on the life of the chief executive officer
of the Bank of Tokyo in 1987 and the attack on the Nissan plant that
same year by Sendero Luminoso. The Bank of Tokyo eventually closed its
offices and left Peru. As a result of these incidents and others that
followed in the early 1990s, some Japanese firms were forced to reduce
the scale of their business.

(8.) Banco do Brasil in Tokyo has stated publicly that it channels
$2 billion from Brazilian dekasegis in Japan, who number about 200,000.
This means that there are four times as many Brazilians as Peruvians in
Japan, which is why these rough estimates are made. (For more on the
Brazilian story see Romero, New York Times, 16 October 1999.) In the
Peruvian case, it is more difficult to come up with an accurate figure
because the agencies that provide dollar remittance services (Convenio
Kyodai, Agencia Yamakawa, Japonesito Express), which are not banks, do
not reveal their information. In August 1999, Japanese authorities
investigated these businesses for tax evasion. Two of the agencies
mentioned above have closed.

(9.) As a result of the warm reception Fujimori received during his
trip to Japan in 1990, an NGO, APENKAI, was created to handle private
donations. For that purpose an account was opened at the Bank of Tokyo.
While Aritomi was assigned as ambassador, he, along with his wife, Rosa
Fujimori, and the President's brother, Santiago Fujimori, were in
charge of the funds. Audits later showed that a portion was never
accounted for (Patrian 2003). APENKAI's main purpose was to build
schools and promote grassroots development projects. In 1992, another
NGO was created, AKEN, which served similar functions. A congressman who
led an investigation of these NGOs has noted that some of the money
received by these agencies is still unaccounted for.

Daugherty, James E., and Robert L. Pfaltzgraph. 1990. Contending
theories of international relations, 3rd ed. New York: Harper Collins.

de la Flor, Pablo. 1993. Peruvian-Japanese relations: The
frustration of resource diplomacy. In Japan, the United States, and
Latin America: Toward a trilateral relationship in the western
hemisphere, edited by Barbara Stallings and Gabriel Szekely, 171-190.
Baltimore: Johns Hopkins University Press.